The True Takings Reforem Imperative; D. Kochan

The reform bills re-enforce the letter of the Fifth Amendment's Takings Clause1 as a liability rule. They allow the government almost unlimited power to affect a citizen's property, as long as it pays for its actions. Reparation payments for harms done to prop erty, however, are seldom perfect compensa,tion for an owner's loss. So, while reforms that focus on increasing the compensatory obliga tions of the government should be embraced, Mr. Kochan is an adjunct scholar with the Mackinac Center for Public Policy in Midland, Michigan, and author of the Center's recently published report Reforming the Law of Takings in Michigan. the spirit of the Takings Clause is that the government should employ its power of em inent domain only in situations of necessity that is, when addressing concerns not suscep tible to private solutions. In the Lockean tradition, the Framers of the Constitution created a government of limited powers, with the protection of prop erty constituting its essential purpose. "The great and chief end therefore, of men's unit ing into commonwealths, and putting them selves under government, is the preservation of property," wrote John Locke, adding, "To which in the state of nature there are many things wanting.,,2 James Madison observed the essential cor relation between property and the state when he wrote, "Government is instituted to pro tect property of every sort. ... This being the end of government, that alone is a just gov ernment, which impartially secures to every man, whatever is his own.,,3 In this light, it is clear that "protection" and "preservation," not merely "compensation,"

must be the focus of just governance. In an era of burgeoning governmental regulations, we are moving toward a society in which there are "many things wanting" in the preservation of property. Countless govern ment programs, including historic preserva tion, zoning, and environmental regulations, drastically affect the uses and values of pri vate property. Though work can be done to create a statutory, constitutional, and juris89 90 THE FREEMAN • FEBRUARY 1997 prudential structure that provides a more just system of compensation for property owners aggrieved by governmental actions, no system of compensation can perfectly replace the value owners attach to their property. Subjective value is impossible to validate when determining damages, so compensation awards are forced to use the "market value" standard. When the government takes land and is only required to pay the amount of market value diminished, however, the cur rent owner may not be fully compensated.

The owner may attach personal value to the property or may be able to sell his or her property rights to another who values the property more than the average person in the market. Coerced transfers of property rights fail to guarantee a mutually beneficial exchange. Only when the state is forced to bargain with a property owner for acquiring his or her land, a use of land, or a restraint on use, can a more balanced scheme of compensation occur. In a compensation system based on market value, the harm done property owners by govern ment actions may be diminished, but it will never be eliminated. For this reason, among others, responsible policymakers must not just work to correct our definitions of takings and liberalize the system of compensation, but must also work to minimize the amount of takings that actu ally occur. Following the intent of the Fram ers, property rights should be a primary concern, not a secondary concern receiving importance only after fulfilling some other perceived objective of the state.

Moreover, a sound protection of property rights is fundamental to all other liberties.4 As James Madison warned, "Where an excess of power prevails, property of no sort is duly respected. No man is safe in his opinions, his person, his faculties, or his possessions."s The government does not have the unlim ited power to silence an individual so long as it compensates that person for the infringe ment on his right to free speech. Similarly, despite the Takings Clause's more expansive grant of power, the clause should not be considered a carte blanche license to infringe real property rights. The excessive growth of the state's power to control real property has vital implications for the general liberty of the citizenry, and this growth must be brought in check if our property in liberty is to be preserved. Limiting the size and scope of the regula tory state is the most important takings re form. The power of eminent domain is, and was always meant to be, only a power of last resort. 0 1. U. S. Constitution, Amendment V: "[N]or shall private property be taken for public use without just compensation."

2. John Locke, Second Treatise of Government, Richard H. Cox, ed. (Arlington Hts., Ill.: Harlan Davidson, 1982), p. 75. 3. From an essay entitled "Property," published March 27, 1792, National Gazette; reprinted in James Madison, The Papers of James Madison, Vol. 14, Robert Rutland et aI., eds. (Char lottesville, Va.: University of Virginia Press, 1983), p. 266. 4. The Supreme Court has even stated: "Property does not have rights. People have rights. The right to enjoy property without lawful deprivation ... is in truth a 'personal' right. ... In fact, a fundamental interdependence exists between the personal right to liberty and the personal right in property. Neither could have meaning without the other. That rights in property are basic civil rights has long been recognized." Lynch v. Household Fin. Corp., 405 U. S. 538, 552 (1972). 5. Madison, supra at 266. ---_._--------------------THEFREEMAN IDEAS ON LIBERTY EconomicFreedom: Its Measurementand Importance by James D. Gwartney S ince the time of Adam Smith, economists have generally argued that individuals will be more productive when they are eco nomically free. Thus one would expect market economies to grow more rapidly and be more prosperous than those that are politically organized and centrally planned.